2024 (6) TMI 905 - AT - Central Excise

Abatement of appeal - whether the Appeals continue after initiation of Corporate Insolvency Resolution Process (CIRP) and Order approving the Resolution plan passed/approved by the Learned NCLT under Insolvency and Bankruptcy Code, 2016? - HELD THAT - The Mumbai bench of this Tribunal in the case of M/S. ALOK INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR AND COMMISSIONER OF CEN. EXCISE, MUMBAI CENTRAL 2022 (10) TMI 801 - CESTAT MUMBAI the Learned Advocate for the appellant observed that Rule 22 should be applicable the moment the successor interest with sufficient rights is appointed by NCLT to make an application for continuation of the proceeding. The Hon ble Supreme Court and High Courts in a catena of cases that the Tribunal is a creature of the statute; it cannot travel beyond the express powers vested under the Statute or Rules framed under the statute, while deciding a statutory Appeal filed before it against the Orders of the prescribed statutory authorities mentioned under the statute. The corollary, any order passed by the Tribunal beyond the vested powers under the statute would be non est in law. The appeal abates once the CIRP is initiated and IRP appointed and/or Resolution plan is approved - the appeals filed by the Appellant and the Revenue abate as per Rule 22 of CESTAT (Procedure) Rules, 1982. Appeal abated.

Summary

Issues involved:
The issues involved in this case are related to the payment of central excise duty utilizing cenvat credit, invoking Rule 8(3A) of Central Excise Rules, 2002 and Section 11A of Central Excise Act, 1944. Additionally, the abatement of appeals due to Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 is also a key issue.

Payment of Central Excise Duty Utilizing Cenvat Credit:
The central issue in the appeals was the payment of central excise duty using cenvat credit, with a default in monthly payments. The Commissioner confirmed the duty amounts paid using cenvat credit under Section 11A of Central Excise Act, 1944, along with interest under Section 11AA. Goods were confiscated, and penalties imposed under Rule 25 of Central Excise Rules, 2002. Appeals (2), (3), and (4) challenged the penalty imposition, while the Department appealed against the allowance of cenvat credit despite defaults in appeals (5), (6), and (7).

Corporate Insolvency Resolution Process (CIRP) Abatement:
During the appeals, CIRP was initiated against the appellant under the Insolvency and Bankruptcy Code, 2016. The NCLT approved the resolution plan, declaring a moratorium on actions against the appellant. The appellant argued that the NCLT order would be binding on all stakeholders, including the government, citing relevant case laws. The Revenue argued that once the resolution plan is approved, the appeals abate as per Rule 22 of CESTAT Procedure Rules, 1982, supported by case laws.

Decision and Rationale:
The Tribunal analyzed Rule 22 of CESTAT Procedure Rules, 1982, and observed that appeals abate upon the NCLT's approval of the resolution plan. The Mumbai bench emphasized that the successor interest must apply for continuation of proceedings after NCLT appointment. The Tribunal concluded that the appeals abate upon CIRP initiation and resolution plan approval, in line with previous decisions. It reiterated that the Tribunal's powers are limited by statute, and any order beyond statutory powers is invalid.